The US debt fell on expectations of tightening the policy of the Fed
US government bonds fell sharply on expectations that the US Federal Reserve will raise the key rate in December, while other central banks will reduce monetary injections into the global public debt market.
Friday yield of 2-year securities rose to 0.88%. 10-year bonds reached 1.879% per annum, 30-year bonds – 2.639% per annum. All three values - a record for 5 months.
Prices for US sovereign debt have fallen since July, under a carbon copy, repeating the dynamics of futures on the Fed rate. Those pawn already 74% of the increase in December against 35% in the summer – after the decision of the UK to withdraw from the EU.
In October, the correction accelerated and spread to other sovereign markets. Following the American papers fell Germany, France and Britain. The yield of the German Bunds from minus 0.119% at the beginning of the month rose to 0.167% on Friday.
In addition to the Fed’s plans to raise the key rate of investors, the further policy of the ECB, the Bank of England and the Bank of Japan are worried more and more – whether they will continue to pour hundreds of billions of pounds, euros and yen into the state debt market in order to keep the yield low, and prices at highs were told by the FT managing director Columbia Threadneedle Investments Erian Hilton.
“Gradually, the idea appears in the focus that quantitative easing is out of fashion,” he notes.
“Views on the future of monetary policy are changing: central bankers are steadily signaling their unwillingness to reduce rates further,” BNY Mellon chief strategist in Boston Marvin Loch told Reuters.
The consequences may be more than just a local correction, says former head of PIMCO, asset manager of Janus Capital Bill Gross.
The rally in the US government debt market has lasted for more than 40 years – with the abolition of the gold standard in 1972, and its last stage – outright “manipulation” by central banks, Gross said in 2015 on CNBC.
“It’s a manipulation, perhaps a deliberate manipulation to strengthen the real economy, but there is no doubt that the price of the assets in this case is a big question. And in the end, when central banks stop manipulating markets, prices will move significantly lower, “- said Gross.
According to the US Treasury, the sovereign holders of the American debt (central banks of other countries) for 12 months for the August-2016 reduced their investments by 230 billion dollars – to a minimum since 2012 at 3.948 trillion dollars.
Net sales by the Central Bank of the US record for the first time in 17 years.